Counsel to the Owner with Chris Dunn: William Hastings, Hastings Architecture

June 29 2021

The Counsel to the Owner series is hosted by Waller partner Chris Dunn, a recognized leader in the U.S. construction industry representing owners and developers in projects across the country. In this continuing series, Chris interviews leading industry figures to provide candid insights on trends and developments affecting the unique interests of the owner-developer community.

In this episode, William Hastings and Hastings Architecture have been involved in some of Nashville's most recent and recognizable developments, including Virgin Hotels Nashville, Asurion's Gulch hub, Thompson Nashville, the renovation of the Ryman Auditorium, and much more. In this episode, he highlights trends in his industry and explains what's to come in the wake of the COVID-19 pandemic.

Transcript

Morgan: Welcome to PointByPoint. This is Waller's Chief Business Development Officer and the host of the podcast, Morgan Ribeiro. On today's episode, we are kicking off our Counsel to the Owner series, where Waller construction partner Chris Dunn will interview leading experts in the design, construction and real estate industry.

Chris leads Waller's development and construction team and is a recognized industry leader, representing owners and developers with sophisticated construction projects across a variety of industries, including healthcare, hospitality, manufacturing and mixed-use developments. He was recently named a Fellow with the American College of Construction Lawyers, a national organization of lawyers who are dedicated to excellence in the specialized practice of construction law.

Today, he will be talking to William Hastings with Hastings Architecture. Hastings has been involved in some of Nashville's most recent and recognizable developments, including the Virgin hotel, Asurion's Gulch hub, the Thompson hotel, the renovation of the Ryman Auditorium, and much more. We are really looking forward to these conversations to highlight the trends in the industry and what's to come in the wake of the COVID-19 pandemic.

With that, I will turn it over to Chris.

Chris: Thank you very much, Morgan. And thank you to our guest William Hastings, a principal at Hastings Architecture. William, welcome.

William Hastings: Thank you, Chris. Thanks for having me. And I'm glad to be with you today.

 Chris: You've got a really interesting backstory and history as a Nashville native. And you have a unique experience at your firm in terms of how it was founded. Could you tell us a little bit about that?

William Hastings: Absolutely. Our family moved to Nashville in '71, and our firm was founded in '85 by my mother and father. So I, at that time, was 13 years old and watched the firm grow from the sidelines as a teenager, and then joined the firm in ' 99. So this will be my 22nd year with the firm. So we're 37 years in Nashville now.

Chris: That's remarkable. That's really cool where you were put to work early on in your teens.

William Hastings: Yes, I was. As a matter of fact, we started the firm in November, roughly, of '85 and our Christmas Eve was moving into our first offices for Hastings Architecture, which was the top floor of the L&C Tower, the old observation deck, which is a very small 1500-square-foot space. And that was Christmas Eve. So yeah, it started at a very young age.

Chris: Tell us just at a high level, a little bit about your firm and the markets they serve.

William Hastings: We're an 85-person firm based here in Nashville. And as was said, we started with two people and now we're a little more than 80 and have just grown very organically through really just having great clients who want us to grow with them. And now that's led to a firm that was based in Middle Tennessee doing work in Nashville and now we're active in about 13 different states. We have corporate workplace clients that we're working for all across the country, as well as commercial developer clients we have relationships with from South Florida to North Carolina to Philadelphia - mostly the East Coast, but we do have some active work outside of that.

Chris: Is it fair to say the clients are taking you on the road?

William Hastings: Yes. Our growth in those other markets has come with relationships where maybe our first project was in Nashville with that client and then, we did a good job and they asked us to jump on a plane and fly with them to some other city, which we're more than happy to do. That has definitely been where our growth has happened geographically.

Chris: That is great. In terms of industry sectors, Big picture, where does Hastings spend most of its time? What type of projects?

William Hastings: We're heavily involved in academic work and that's K through 12, both independent and public schools, higher ed as well. So we're doing a tremendous amount of work in the higher ed space. We're also involved in the commercial sector, which is a big, broad sector, but in commercial, we're involved in hospitality, which would be hotels, workplace, corporate office, and then luxury residential as all in the commercial sector.

And then also civic projects. So some of our most exciting projects might be a small pavilion and a park for Nashville. So we're also involved in a lot of civic projects. So it's pretty much those three are the biggest categories, but we also provide sustainability consulting for different clients across the country, as well as some other kind of specialty consulting services.

 Chris: That's great. William, when I talk to you, every time I emerge knowing more about the Nashville market and I want our listeners to get a sense because I always consider it interesting and insightful. Talk to me a little bit about the Nashville regional market post-COVID and maybe you could look at it by sectors. What do you see from where you sit?

William Hastings: Workplace - obviously I'll start with that one just because it's a big sector that everybody's focused on, especially with the Oracle announcement and some of the other big corporate relocations that are in the market.

There's a tremendous influx of people to the Nashville market who are either working remotely and working at a different city for a company based in another city but they're choosing Nashville to live, or they're relocating here as a company or an organization.

I think the return to work is something that's still playing out how that's going to work. How many people are coming back versus how many are going to be remote. And that's a whole separate podcast that we probably should do sometime. But that's very much dependent on the culture of different companies.

They're all doing different things and approaching that issue differently. Hospitality obviously slow, but coming back quickly. The tourism is obviously back, at least from our friends that own hotels. They're telling us that their Thursday through Sunday bookings are really strong. But there are business travelers where they're really suffering still.

So getting conventions back and getting business travel back will be critically important there. Academic works continuing with the growth in population comes more need for schools. So we're saying that as well as the universities here are thriving because of the attractiveness of their academic programming, but also the city.

Chris: Really interesting. How would you say that Nashville compares to other markets that Hastings serves?

William Hastings: I would say it's very similar in some ways we're doing quite a bit of work in Charlotte, quite a bit of work in Raleigh, in Florida and a couple of different cities. Those are all the hottest. If you hear where some of the greatest success is right now, in terms of economic success, prosperity, etc., it would be in those markets.

So I would say Charlotte and Raleigh are very comparable to Nashville right now in terms of the activity. And then Florida in general is booming as a state. And Austin is, continuing to do incredible things - a lot of growth there.

Chris: When I think about COVID's impact on immigration to Nashville. My own personal sense is Nashville obviously was booming before COVID and I wonder if that's going to accelerate post-COVID for the reasons that you just mentioned the mobility and work and people having flexibility to choose where they live and that migration to places that have maybe a little more livability than really large cities.

William Hastings: I think it's hard to think about who are winners from a pandemic, but I would say in terms of the economic impact, Nashville will absolutely benefit. Maybe cost of living's an issue, availability of outdoor space, the climate that we have, it's a highly desirable place to live. And even though affordability is becoming a bigger issue for us, we're still extremely affordable compared to a lot of the cities that people are relocating from. But even maybe more so than affordability, we're very livable.

 Chris: But the migration and development growth will bring challenges. What other challenges do you see that'll come from rapid growth here in Nashville?

William Hastings: I think the big topics that you're hearing a lot about already, one is mobility. That is certainly going to be a topic that's discussed a lot in the months ahead. Affordability is definitely still a challenge. There are a lot of people who are finding it more and more difficult to live in the city of Nashville because of the cost.

And so that is a real issue. Equity is top of mind and critically important. And as we're thinking about development and new projects and all this density, how do we maintain an equitable place for everyone to live is important. But then I think maybe the last one is access to open space and green space.

I think we're going to see more and more pressure on our greenways, on our parks, and we're going to need more of them. We're going to need more park space. We're gonna need more Greenways and we're going to need those to be more and more accessible to all the communities of Nashville and the Mayor's office is already focused on this topic, but I think it's going to be, that's going to be a great opportunity.

Chris: And it might be counterintuitive until you think about it a little, right? William, how do you think your pipeline looks maybe for the next six months or a year? Do you have a sense there?

William Hastings: The last 14 months I couldn't answer that question because of the pandemic. Every week was something different and something new and some new challenge.

But I think today in our market, we're seeing the pipeline is continuing to get filled, which is very positive. I think that there are going to be significant opportunities moving forward and the next one to three years in terms of work that's being discussed now is going to be full of great design opportunities.

Chris: So one thing that I'm seeing in my practice a bit and I'm wondering about yours is how parties are coping with the spikes in inflation and material costs. Are you seeing that too? I think I know the answer, but let me ask a second question, which is, do you think it's having an adverse impact yet on the amount of growth or the amount of business.

William Hastings: I don't see cost escalation killing deals at this point, but the availability of materials is the issue that is really wreaking havoc on design and construction right now. The supply chain issues and not knowing when those supply chain issues are going to improve is challenging, for sure.

It is impacting materials that you might select for a building where in the past, it's just a forgone conclusion that it's going to be available. All you have to do is order it. That's not the case right now. So it is definitely requiring a different level of digging. You're asking another question that you wouldn't have asked before: is it available?

Not just, can we afford it, but is it available? Can we get it? So it's definitely impacting it, it's requiring contractors to plan ahead and work even harder to maintain schedules. They're doing a great job across this market but it is definitely making their job more difficult as well.

Chris: So we both have friends who are contractors and I totally agree with you there. Having to work harder for it, but by and large, seem to be successful. I think when people think about construction commodities, they naturally think about contractors who are buying things day in, day out, having a real close sense of the market.

 How does Hastings as a design firm really stay close to the market? What's the strategy there or how do you do that? What resources do you guys look to?

William Hastings: The best resource we have is our activity in the market. So we've got multiple projects at any given time that are at different phases of design or construction.

So we're really getting real-time data on construction costs almost weekly. It's really terrific information because it's from a large variety of different sources. So it's not one contractor that we work with who's giving us a cost assessment on one project. It's four contractors, all different, all regional or national firms who are giving us cost estimates on four different projects, maybe in our market here or in other markets.

So we're able to take all of that data and can track it real-time. So the volume of activity that we have really allows us to have almost weekly information about what's happening with drywall or steel or concrete, or a variety of different materials.

Chris: So is that Intel impacting your designs yet? Is it having a practical, real-life impact on how you design?

William Hastings: Yeah, it does. It absolutely does. Fortunately, or unfortunately, all of our clients have budgets. So having knowledge of a budget and being able to understand when you design a building what the building is going to cost early in the process saves our clients a lot of time and a lot of money because we don't spin trying to figure out, can we afford this or not? We have a tendency to know ahead of time. So that does, I think, streamline the process and we think leads to better design because it allows us to spend our time and energy on exploring things that we know we can do.

Chris: Let's talk a little bit about contractors and owners. So you're a veteran to seeing the development process, the design process, the construction process. What is something that you wish both owners and contractors knew better about what design firms do. Is there something that comes to mind there?

William Hastings: I think that our involvement early on in the process is probably a little bit abstract for people, meaning it's not unusual for us to be involved with a client when they just have an idea of a building they want to build or an idea of a problem they want to solve.

And they might bring in a lot of trusted advisors to help them, bounce this idea off of, and we have a tendency to be involved in those discussions very early. And it's really fun, because you're making a different type of impact.

I heard a friend who runs a big contracting company here in Nashville not long ago say he was a part of one of these meetings and he said, I never get to be this involved this early. And I didn't realize you guys had these kinds of conversations with your clients. We get it after it's already half-baked right now. And so I think that's probably something that would surprise people. And is really rewarding in a frankly, it's one of my favorite parts of what we do.

Do you think that could get projects off onto a better foot if there was more involvement earlier in the process?

Absolutely. The earlier the design team is onboarded and the earlier the contractor's involved, it absolutely leads to better outcomes. And frankly, it's just more fun.

 Chris: We spoke a moment ago about budgets and schedules and those are paramount, obviously. What are the traits that you see in both contractors and owners who are good about making sure that projects do arrive on budget and on schedule?

William Hastings: I'll start with the owner because without them, the contractor and architects wouldn't have any work to do. Owners who assemble a great team early in the project - It helps so much.

If there's a level of trust, it's a lot more fun, that's for sure. And it's a lot more fruitful, frankly, I think for our clients who make sure that the contractor understands their expectations as an owner and the design team. And then everyone's on the same page is really important and owners that appreciate design, but also understand budget and schedule and want to balance those things.

And also lifecycle cost versus first cost owners that appreciate all of that and care about all that - it is so much fun to get to work with them. Contractors flipped to that real quickly. The more accurate information they can provide early in the process, the better the whole project goes every time.

And so contractors - we work with some great ones in the Nashville market and in other cities - that really dig in and they want to know: How are you? What is your idea here from a design standpoint? That want to make sure we budget this right so that when we executed we've allocated the right cost and we want to do that really early. That is incredible because it allows, I think, better design. It also allows the owner to get more for their money. And it also allows us to manage everyone's expectations the whole way through. And so most contractors are great at that. And when they do it well, it's pretty exciting.

Chris: In my experience, the owners who have the most successful projects do have kind of a collection of traits. One of them is that they tend to be very active participants. They're not passive, they're very involved early with their design team. They have that same kind of spirit with their contractor and they don't check out on the project, even when design is done They're active and the designers and contractors just kind of always feel their presence.

Now it's not always entirely fun stuff. They may be taking a very hard look at an application for payment and looking at schedule values and that sort of thing. But the owners that I see who nip things in the bud and identify rocks in the road really do keep their projects on budget and on scheduled tasks.

And I want to get your take on this. The one area that I see the seeds of disputes most frequently is where there's a lack of understanding of the scope of the project. And literally, you can have the architect and the owner and the contractor all seeing different things in their mind's eye in terms of what the project is going to be. And those projects more than ones that have tight timetables or maybe ones that have complicated sites are the ones that I think get into the most trouble where the scope is just not really well-defined, not really well understood. I don't have any statistics on it, but those are the ones that, that I ended up litigating. What do you think about scope definition in terms of successful projects?

 William Hastings: I think it goes back to that comment a minute ago, about that early involvement in almost even helping develop the scope with the clients. I think if the team is brought on early enough, and if the design team understands the client's expectations and if the contractor understands that, those potential misunderstandings have a tendency to not become problems. And it is where there's some ambiguity or lack of decisiveness on something or lack of clarity -those types of things all create challenges for projects. The more clear the owner is on their expectations for everyone and the more they communicate that to everybody, the more likely everyone stays in their lane and does what's expected.

Chris: Have any clients that aren't fully engaged? The idea of a client checking out for a period of time during a design phase or during construction - our clients have a tendency to be extremely hands-on so I haven't seen much of that.

 William Hastings: That's a good thing by and large but it also keeps you on your toes. We'll put it that way.

Chris: So how about this question? It relates to scope in Middle Tennessee. We've got some challenges on-site conditions and we've got rock in places and we've got some soils that can be tricky to handle. If you were counseling a client who had a site that maybe had some tricky features, what's your advice? Obviously, we've got good geotechnical engineers in the area. We've got good environmental engineers, but even before we're talking about kind of the ground up area where you're really going to come into play. What kind of counsel do you give people about Middle Tennessee region site conditions?

William Hastings: Yeah, we talk about it a lot. It is back to that early discussion with a client where they come in with a piece of property saying, what do you think? The soil conditions are a real issue, but so are certain regulatory issues, and we try to dig in - pun intended - on the soil conditions and what are the regulatory issues that are going to be associated with one site versus another. And some of the biggest budget busters can be someone not appropriately allocating costs to doing site work.

Early site investigation, for sure from a geo-technical standpoint, obviously. Environmental is important, but then also quantifying it. What does that mean from a cost standpoint? The issues with rock are real and people from out of this region are in some cases worried about the cost of removal of limestone and other things.

But the fact is our soil conditions in many cases are great. For buildings, they're expensive to remove the rock, but the foundation systems associated with, that park is pretty good. And so there's some savings that come that offset some of the premiums. And so we try to educate people on those topics so that they're informed. And then some of the other issues around soil conditions, obviously we have a lot of fly ash and other materials that have to be removed and dealt with and those are more complicated and harder to quantify and have greater risk attached to them.

Our big advice there is to make sure we're allocating the right amount of money to it, and then have the right amount of contingency when we get surprised.

So those are all the things we do.

Chris: Just good sound planning, right?

We're in the home stretch on our interview. I'm going to take you now through a speed round where I'm going to ask you to make some crystal ball projections.

And I'll try to ask them as yes/nos.

William Hastings: So Nashville permit construction value in 2020 was a record-high $4.6 billion. Yes or no, we'll we have an increase on that in 2021.

Chris: Yes. Okay. I agree. I agree.

In terms of development, which suburban county do you think will have the most growth in the next five years? I'll give you some options here: Sumner, Rutherford, Williamson, Wilson or Maury?

William Hastings: Close, but I'm going to say Williamson.

Chris: Okay. All right. Did you have a second in mind?

William Hastings: I think Maury is going to continue to flourish and they're all going to benefit from growth, for sure. But I think Williamson and Maury are going to be the brightest stars.

Chris: Okay. A little personal flare here. Give me your favorite Nashville area park. You talked about green space.

Warner Parks. Percy Warner. Just an absolutely treasure. That is such a gift to our city but it is being heavily utilized because of our growth. And it goes back to my earlier comment about we're going to need more parks and more green space because the ones we have aren't going to be able to accommodate the growth, especially with people living in higher density. They're going to need places to go.

Didn't COVID prove that more so than ever, like it accelerated that discussion even more in our community a hundred percent.

A little bit different topic. How about prefabricated construction? By 2025, do you think it'll be 10% or more of U.S. construction?

William Hastings: I don't. That would be a big number. But I do think the supply chain issues we're seeing right now, and the reliability of the supply chain is absolutely going to accelerate the prefab because you can control it and you can control it in a manufacturing setting. And contractors are going to be pushing hard for more prefabrication, whether it's something as simple as bathroom units in a hotel, or whether it's a full prefabbed home.

Chris: What sectors do you think prefab will really get traction in?

William Hastings: Residential and hospitality are the two that, I think, we're going to continue to see a lot of that. There's a lot of prefabrication and the mechanical work already, plumbing, lot of that is prefabbed and brought even for workplace, office projects and things like that.

But I think you'll see, more prefab in the residential and already have it in hospitality, but it'll grow there as well.

Chris: Okay. Last one. And it's affordable housing. Do you think in the next three years that Tennessee General Assembly will pass some form of affordable housing legislation?

William Hastings: I hope so. I think we need it. I think other states and certainly cities that we consider to be peers - aspirational, In some cases - they have something.

I hope that what they come up with is something that's an incentive to do the right thing and to have the right mix of affordable in our communities, rather than something punitive right now.

Chris: It's always a pleasure to talk with you. Thanks for coming in.

William Hastings: Thank you, Chris. Appreciate it.